Several Arrests in North Minneapolis Fraud Scheme

Universal Mortgage, Inc., Universal President Donald Walthall, and Universal loan officers and agents Marlon Pratt, Rahmeen Underwood, Andre Bellfield and Cleveland Fields have been charged by Hennepin County Attorney Mike Freeman with theft and racketeering in a 25 count criminal complaint. Two of the defendants were taken into custody and have been released, however there are outstanding warrants for the remaining three defendants.

The complaint alleges a $4.9 million mortgage fraud scam making it the largest in a series of similar cases filed in recent weeks.

The complaint identifies 24 homes involved in the scheme, most of which are located in North Minneapolis, Minnesota and have gone into foreclosure. The complaint identifies five straw buyers used by Universal to purchase from 2 to 9 homes each.

The complaint alleges Universal Mortgage and its agents falsified the loan applications for its straw buyers to qualify them for bank loans. False statements in the applications concerned employment histories, incomes, assets, debts and intentions to reside in the purchased homes.

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source: mortgagefraudblog.com

Law Firm, Lender & Broker Settle Kickback Allegations

Reiner & Bendett, P.C., a Farmington, Connecticut law firm, Absolute Mortgage Solutions, LLC, an East Hartford, Connecticut lender, and Access America, LCC, DBA Century 21 Access America, a Wethersfield, Connecticut broker, will pay $700,000 in fines, forfeitures and restitution to settle allegations they engaged in illegal kickback and inducement schemes. Of the money, $125,000 will pay restitution to about 500 Absolute consumers who overpaid for certain mortgage-related services as a result of one of the schemes.

In an October 2007 lawsuit filed on behalf of the Department of Consumer Protection (DCP) Commissioner and the Insurance Department, it was alleged that Reiner, which also sells title insurance, used sham service, rental and other agreements to conceal $142,200 in kickbacks and unlawful inducements between 2002 and 2005. In exchange, Absolute and Access allegedly steered title insurance business to the law firm. Connecticut law prohibits title insurance agents from paying for referrals.

“This law firm used service and other sham contracts to camouflage kickbacks and sidetrack state law,” Attorney General Richard Blumenthal said. “Consumers were overcharged because of this underhanded scheme. Reiner and Absolute conspired to conceal illegal payments as fake fees, secretly forcing consumers to cover the cost of kickbacks. The law firm hid illicit payments to Access in phony ‘marketing’ and ‘rental’ agreements. These steering schemes increased consumers’ costs and denied choice, while unjustly enriching the lawbreakers.”

“Each of about 500 consumers will receive $200 early in the New Year. These firms will rightly give back their ill-gotten gains to compensate consumers and help the state fight similar schemes. I will fight to enforce state laws banning kickbacks and other anticompetitive practices that increase costs to consumers,” Blumenthal added.

Insurance Commissioner Thomas R. Sullivan said, “This type of practice is not only harmful, but it puts yet another burden on homebuyers by adding unnecessary expense to real estate transactions involving title insurance.”

DCP Commissioner Jerry Farrell, Jr., said, “Today’s settlement should serve as a very strong message to the real estate community that behavior of this sort is clearly against the law and will be prosecuted. It is of particular concern to me as the licensor of real estate salespeople and brokers to hear that this has occurred, and if we find other examples they will be equally and vigorously investigated.”

Reiner agreed to pay mortgage broker Absolute $200 per customer to perform certain closing services, including ordering a title search, assembling closing documents, assuring insurance was in place and coordinating the closing. Reiner paid Absolute $76,200 in 2004 under the agreement.

Consumers, however, had already paid Absolute for the same and other services. Blumenthal and Sullivan charged that the arrangement was a ruse to conceal illegal payments to Absolute for steering customers to Reiner for their title insurance.

Under the settlement announced today, about 500 Absolute customers are eligible to receive $200, returning unnecessary fees charged them to underwrite the kickback scheme. Consumers will be notified by mail how to apply for the refund.

Reiner used two other bogus agreements to conceal $66,000 in kickbacks to Access between 2002 and 2005. One contract called for Reiner to pay Access for nonexistent “marketing” services. Under a second oral agreement, Reiner paid Access to “rent” space in Access offices for closings and other business.

Of the $700,000, $125,000 will compensate Absolute consumers, $425,000 will be deposited into the state’s General Fund and the remainder used for consumer education by the Attorney General’s Office, DCP and the Insurance Department.

The agreement caps a two-year joint investigation by the Insurance Department and the Attorney General’s Office. The investigation was prompted by unusual market activity reported to the Insurance Department. DCP and the Banking Department also participated.

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source: mortgagefraudblog.com

Default Resolution to Civil Complaint Against Appraiser

Jay Riccardi, Toledo, Ohio, the remaining defendant in a civil suit by Mortgage Lenders Network USA Inc., Middletown, Connecticut, failed to answer, plead or otherwise respond to the Amended Complaint. The Court therefore ordered judgment against him in the amount of $97,662.21. The judgment compensated Mortgage Lenders Network for its incurred losses but declined to award damages for “projected losses” or punitive damages. The court did leave open the order in the event that Plaintiff obtains further documentary evidence of its projected losses.

As previously reported by Mortgage Fraud Blog, Mortgage Lenders Network, Inc. has dismissed three defendants from the civil lawsuit that it filed in 2004.

David G. Anderson, Bowling Green, Ohio and Emilio Soli, Stow, Ohio were dismissed because, as stated in a document entitled Notice of Plaintiff’s Intent to Dismiss Defendants David G. Anderson, Emilio Soli and Adkins Appraisal Services, Inc. Without Prejudice, according to the testimony of the defendants, they were not involved in the fraud alleged in the complaint. The dismissal was entered without prejudice, according to the Notice, in the event further discovery in the case were to reveal that such testimony was not truthful. According to that same Notice, Adkins Appraisal Services, Inc., Sylvania, Ohio was dismissed as, according to the representations of Debra Adkins and the records of the Ohio Secretary of State, it was not an entity capable of being sued.

Debra Atkins, Toledo, Ohio and Jay Riccardi, Oklahoma City, Oklahoma are the only remaining defendants. The amended complaint alleges that from March to September 2000, Debra Adkins and/or Jay Riccardi conspired to provide false and fraudulent appraisals of residential properties in return for payment. The complaint further alleges that these appraisals were submitted with loan applications and that Mortgage Lenders Network made loans in reliance on the appraisals.

The complaint identifies 19 properties:

142 Garfield Avenue, Findlay, Ohio
409 Griffith Street, Sycamore, Ohio
5556 State Route 19, Galion, Ohio
441 West Wyandot Avenue, Upper Sandusky, Ohio
14946 Wapakoneta Road, Grand Rapids, Ohio
11266 Township Road 196, Vanlue, Ohio
2713 Chestnut Street, Toledo, Ohio
220 South Hazel Street, Upper Sandusky, Ohio
1120 North Union Street, Lima, Ohio
2120 Maplewood Avenue, Toledo, Ohio
12629 Township Road 45, Findlay, Ohio
2999 Remington Ridge Drive, Columbus, Ohio
1458 Atcheson Street, Columbus, Ohio
4843 Imperial Drive, Toledo, Ohio
1016 Elcliff Drive, Westerville, Ohio
755 Hamilton Street, Toledo, Ohio
829 Evesham Avenue, Toledo, Ohio
440 Ewing Avenue, Findlay, Ohio
3141 Pomeroy Street, Toledo, Ohio

The complaint seeks compensatory damages of at least $250,000.

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source: mortgagefraudblog.com

DC Man Sentenced for Selling Homes He Did Not Own

George A. Cowser, 60, Washington, D.C., was sentenced to nearly six years in prison for engaging in a fraud scheme in which he obtained money by selling or offering to sell homes he did not own in the District of Columbia, U.S.

Cowser entered a guilty plea to an indictment in September 2007 before the Honorable Judge James Robertson in the U.S. District Court for the District of Columbia. During the previous plea hearing, Cowser admitted that the government had sufficient evidence to convict him of the fraud scheme. He also acknowledged that the government could prove that the intended loss to victims from the scheme was over $1,000,000. Cowser was sentenced by Judge Robertson to 71 months in prison on the mail fraud counts, and 12 months in prison on each of the D.C. First Degree Fraud counts, to be served concurrently with each other. The Court ordered Cowser to pay $559,183.79 in criminal forfeiture and $29,394.84 in restitution to his victims. Following his incarceration, Cowser was ordered to serve three years of supervised release, during which time he cannot buy, sell or list any property, or open any credit lines or engage in any financial transactions over $5,000 without permission of the U.S. Probation Office.

According to the indictment, between May of 2005 and March of 2006, Cowser devised a scheme to defraud owners of property, individual buyers, and a mortgage company, among others, and obtain money and property from these owners, buyers and the mortgage company by means of false and fraudulent pretenses, representations, and promises. The purpose of this scheme was for Cowser to sell or attempt to sell real estate property in the District of Columbia that he claimed to own personally, or in the name of a company he formed, Reverse Properties, Inc. Neither Cowser nor Reverse owned these properties, had an independent claim of ownership to these properties, or had any contract to sell these properties for the true owners. Even though Cowser knew he did not own these properties, he signed sales contracts, and closed on the transfer of D.C. real estate properties for significant personal profit at the expense of the true owners, defrauded buyers, and financial institutions.

As part of the scheme, Cowser profited, and caused real estate property to be transferred to him or Reverse. Specifically, Cowser used a forged deed to claim ownership of a home in the 1300 block of West Virginia Avenue, NE. He attempted to sell the property to three separate individuals, obtaining money from all three, and actually engaging in two separate closings on a sale to two separate persons in the same week in February of 2006. As a result of these two closings, over $540,000 was given to Cowser or a corporate designee of Cowser. Cowser used some of these proceeds to purchase a 2006 Mitsubishi Outlander XL.

Cowser also attempted to fraudulently sell at least two other houses to buyers, one in the 1200 block of Orren Street, NE, and the other in the 1300 block of W Street, SE. He did so by signing fraudulent quit claim deeds and recording the quit claim deeds with the D.C. Recorder of Deeds. He then obtained money from the purported buyers, unbeknownst to the true owners. The sales did not successfully close, however, because the fraud regarding the West Virginia Avenue property, discussed above, became known. Nevertheless, the purported buyers were not able to recover all of their money that they had given to Cowser and the owner of one of the properties had her personal property damaged, including antique furniture, when it was moved out of her house without her knowledge during the attempted sale.

As part of his scheme, Cowser fraudulently claimed to many potential buyers that he owned dozens of properties throughout the District of Columbia, even though, in truth, he did not own any real property in the District of Columbia and he was not a registered real estate agent. During its investigation, the government also discovered that prior to his arrest, Cowser had executed at least 14 forged quit claim deeds to various other properties in the District of Columbia; each of these forged deeds that contained the false signature of the true owner of the property. Although Cowser did not record these deeds, he did use these forged deeds to defraud other investors out of money.

Moreover, Cowser was on release to the community pending trial with a condition of not engaging in similar fraudulent sales of real estate. Shortly before his trial, however, Judge Robertson ordered Cowser taken into custody based on Cowser‘s allegedly engaging in such sales while on release.

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source: mortgagefraudblog.com

Kentucky Fraudster Sentenced to 3 Years

Santiago “Jim” Santa Cruz, 45, 1816 Justin Cover, Prospect, Kentucky, was sentenced to 3 years and 5 months imprisonment. U.S. District Judge Jennifer B. Coffman also sentenced Santa Cruz to 3 years of supervised release. There is no parole in the federal judicial system.

Santa Cruz had previously pleaded guilty pursuant to a plea agreement to an Information charging him with twenty counts of wire fraud to defraud multiple mortgage lenders. The Information specifically charged him for his involvement as a loan officer in at least 20 separate fraudulent mortgage loans totaling over $800,000. Dean Sexton, a former Louisville closing attorney, and Stan Siwek were also previously prosecuted for their involvement with Santa Cruz in these illegal schemes.

The indictment references the following properties:

10121 Springhurst Garden Circle
2225 Strathmoor Blvd
2041 Bashford Manor Ln
1684 Victory Court
4103 Hunsinger Woods Place
1016 Cecil Ave
3746 Greenwood Ave
2019 Woodland Ave
1364 Cypress St
3505 W. Muhammad Ali Blvd.
404 N. 38th St
2113 Wilson Ave
2021 Woodland Ave
3231 Greenwood Ave
1829 Lee St.
720 W. Catherine St.
4608 Unseld Blvd.

The defrauded lenders include First Union National Bank of Delaware, Mortgage Express, Meritage Mortgage, New Century Mortages, Homecoming Financial, Chase Financial Services and Mortgage Lending Network.

The plea agreement stated that between December 2000 through 2002, Santa Cruz worked with others to defraud a number of residential mortgage lenders while he was working as a loan officer at a Louisville, Kentucky mortgage brokerage company. The fraudulent scheme worked by Santa Cruz and others providing fraudulent representations to the lenders in order to induce them to fund loans that they otherwise would not have funded. To execute the scheme they caused fraudulent loan documents, such as loan applications and HUD-1 settlement agreements, to be created. These documents contained, among other things, false information relating to borrowers’ employment, income, assets, down payment, and credit information. These documents were then provided to lenders in support of borrowers’ loan applications.

During the course of the scheme, Santa Cruz was involved in the following: creating false borrower loan applications, which falsified the financial condition of potential borrowers; providing lenders with false employment and false financial information, including W-2 Forms and bank statements of potential borrowers; creating false closing documents that did not reflect the actual selling price of the real estate, falsely represented that down payments were made from the buyer to the seller, and concealed that proceeds were distributed to buyers following their closings; creating fictitious down payment checks that made it appear to the lender as if the buyer had made a down payment to the seller when, in fact, no down payment had been made; creating and filed false title documents that created the appearance that real estate had previously been transferred; creating documents that appeared to remove liens on real estate even though the liens were not actually removed; providing lenders with fraudulently inflated appraisals; and using names of fictitious loan brokers to process fraudulent loans.

This case was related to other cases prosecuted by the United States Attorney’s Office. Stan Siwek was prosecuted for his similar involvement in the scheme and was sentenced to 15 months on July 12, 2007. Dean Sexton, a former Louisville closing attorney was sentenced to two-and-a-half years on June 18, 2007, for his role in the scheme.

The case was prosecuted by Assistant United States Attorney Bryan Calhoun, and it was investigated by the Federal Bureau of Investigation.

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source: mortgagefraudblog.com